For anyone looking on how to key in negative FV or PV in Calculator, just press 'Reset' button after keying in the PV or FV to make it negative. You are welcome.
@IFT: Referring to Q.3 from Section 7.1 - You invest $900 today and receive a $100 coupon payment at the end of every year for 5 years..... - Want to understand the concept behind this calculation. Even using calculator, it is applying some formulae & evaluating. So, how is this problem manually solved using the formulae & how to represent it using formulae?
Given a present value, a series of equal values that occur after equal intervals in future and/or a single value at some future date that are subject to compound interest, the interest rate can be worked out using either of the following equations: PV = PMT × 1 − (1 + RATE)-NPER + FV RATE (1 + RATE)NPER FV = PV × (1 + RATE) + PMT × (1 + RATE)NPER − 1 RATE Where, PV is the present value i.e. a single sum at t=0, FV is the future value i.e. a single sum at t=NPER, PMT is the periodic equal cash flow that occurs after equal interval, NPER is the total number of periods between PV and FV, and RATE is the periodic compound interest rate. The above equations look over-whelming even though they are just different forms of one relationship. We can only solve them using the hit-and-trial method. We plug different values and keep notching it up and down till we get a value that best fits the equations. Instead of going through the hassle, we can use the calculator. IFT Support Team
Given a present value, a series of equal values that occur after equal intervals in future and/or a single value at some future date that are subject to compound interest, the interest rate can be worked out using either of the following equations: PV = PMT × 1 − (1 + RATE)-NPER + FV RATE (1 + RATE)NPER FV = PV × (1 + RATE) + PMT × (1 + RATE)NPER − 1 RATE Where, PV is the present value i.e. a single sum at t=0, FV is the future value i.e. a single sum at t=NPER, PMT is the periodic equal cash flow that occurs after equal interval, NPER is the total number of periods between PV and FV, and RATE is the periodic compound interest rate. The above equations look over-whelming even though they are just different forms of one relationship . We can only solve them using the hit-and-trial method. We plug different values and keep notching it up and down till we get a value that best fits the equations. Instead of going through the hassle, we can use the calculator. IFT Support Team
A good general rule of thumb is if you are going to deposit cash today, you would use the positive sign, and the future value must be negative. When you want to save money for example, you would use the negative sign for PV, and future value must be positive in this case. You cannot have both present and future value be negative as this will give you an error when inputting it onto the calculator.
No. 3 - re the int. rate calculation for the $100 monthly coupon over 5 yrs, w/ $900 as PV & $1,000 FV, I got 14.37% using the HP12C calc. Did anyone else get the same answer?
@IFT why did u put negative sign for PV (-900) in Q 7.1 but positive sign for PV (+7500) in Q.72 when the question said both invest. Or it will give you the same answer by just putting opposite sign of Pv and Fv ? Thank you so much Sir
You need to calculate interest rate given the information i.e. PV, pmt, FV, and n. Simply plug in the numbers in the calculator and compute I/Y. IFT Support Team
Example 7.3 why is this example not solved using annuity due.ie beginning annuity payment since monthly payment has to be paid at the start of each month??
@@lamiyahajizada7581 This is something that will be difficult to solve manually. Assume r to be the interest rate. The FV for PV = 900 is 900*(1 + r)^5. The FV for payments 100 can be calculated by using formula for FV for Ordinary anuities. (note: FV will be negative because we are receiving payments. Using FV formula because it makes it easier) This FV = -1* 100* ((1 + r)^n - 1))/ r Now add both the FVs to get the real FV = 1000. As you can see, it will quite difficult to solve it via calculator as well.
Want to read FREE NOTES for the Level I exam? You can find it here: ift.world/notes/
For anyone looking on how to key in negative FV or PV in Calculator, just press 'Reset' button after keying in the PV or FV to make it negative. You are welcome.
@IFT: Referring to Q.3 from Section 7.1 - You invest $900 today and receive a $100 coupon payment at the end of every year for 5 years..... - Want to understand the concept behind this calculation. Even using calculator, it is applying some formulae & evaluating. So, how is this problem manually solved using the formulae & how to represent it using formulae?
Given a present value, a series of equal values that occur after equal intervals in future and/or a single value at some future date that are subject to compound interest, the interest rate can be worked out using either of the following equations:
PV = PMT ×
1 − (1 + RATE)-NPER
+
FV
RATE
(1 + RATE)NPER
FV = PV × (1 + RATE) + PMT ×
(1 + RATE)NPER − 1
RATE
Where,
PV is the present value i.e. a single sum at t=0,
FV is the future value i.e. a single sum at t=NPER,
PMT is the periodic equal cash flow that occurs after equal interval,
NPER is the total number of periods between PV and FV, and
RATE is the periodic compound interest rate.
The above equations look over-whelming even though they are just different forms of one relationship. We can only solve them using the hit-and-trial method. We plug different values and keep notching it up and down till we get a value that best fits the equations. Instead of going through the hassle, we can use the calculator.
IFT Support Team
you saved my life , God bless you
Thanks for your kind words.
IFT Support Team
May I have the formula of 7.1 Question 3? Thank you
@IFT: Referring to Section 7.3: Size of Annuity Payments - Which formula is being used to manually solve for the problem?
Given a present value, a series of equal values that occur after equal intervals in future and/or a single value at some future date that are subject to compound interest, the interest rate can be worked out using either of the following equations:
PV = PMT ×
1 − (1 + RATE)-NPER
+
FV
RATE
(1 + RATE)NPER
FV = PV × (1 + RATE) + PMT ×
(1 + RATE)NPER − 1
RATE
Where,
PV is the present value i.e. a single sum at t=0,
FV is the future value i.e. a single sum at t=NPER,
PMT is the periodic equal cash flow that occurs after equal interval,
NPER is the total number of periods between PV and FV, and
RATE is the periodic compound interest rate.
The above equations look over-whelming even though they are just different forms of one relationship . We can only solve them using the hit-and-trial method. We plug different values and keep notching it up and down till we get a value that best fits the equations. Instead of going through the hassle, we can use the calculator.
IFT Support Team
In 3rd ques of 7.1, what is the FV at end of 5 years?
FV is 1000.
IFT Support Team
Thanks a lot for great TVM lectures
Are these all quant videos ? Full quant 7modules videos ? 21 videos only?
Hi for the question on down payment, why cant we do it as,
35700*(1+(0.08/12))^12
And finally ANS/12
PMT or P can be calculated manually as follows:
P = 35,700 * ((8%/12) / (1 - (1+(8%/12))^-12) = 3,105.49
IFT Support Team
why when I am trying to solve Q 7.1 NO. 3 on the calculator send me to rest window ?
does this channel's quant videos cover full level 1 CFA syllabus?
i need more clarification on where to assign the negative sign on either present value or future value
A good general rule of thumb is if you are going to deposit cash today, you would use the positive sign, and the future value must be negative. When you want to save money for example, you would use the negative sign for PV, and future value must be positive in this case. You cannot have both present and future value be negative as this will give you an error when inputting it onto the calculator.
Any cash outflow will be entered with negative sign and cash inflow is entered as positive sign.
IFT Support Team
No. 3 - re the int. rate calculation for the $100 monthly coupon over 5 yrs, w/ $900 as PV & $1,000 FV, I got 14.37% using the HP12C calc. Did anyone else get the same answer?
I got 12.83 with my HP12c. However, it seems that mine rounds up the (n) calculations. @06:36 I got 19 instead of 18.85. Do you get the same?
Why are you calculating using monthly coupons? Please share with us your calculation steps.
IFT support team
I have the same issue with HP 12c
@@looomze how did you compute to get 12.83? I have tried in both bin and end mode, yet I do not get 12.83
you get 14.37 if your calculator is set at begin mode
Really helpful and understandable 😍
Glad it was helpful!
IFT support team
Hello guys, can someone help me please?
are the 2020 books the same as the 2021?
Or did they change them ?
when I am clicking compute I/y , calculator is giving error 5
PLEASE! Can I clear level-1 in a 3 and a half month time period? Please respond!!!
@IFT why did u put negative sign for PV (-900) in Q 7.1 but positive sign for PV (+7500) in Q.72 when the question said both invest. Or it will give you the same answer by just putting opposite sign of Pv and Fv ? Thank you so much Sir
Yes, correctly said,
IFT support team
Can anyone teach the calculation for 7.1 Question 3 in formula? Thanks
You need to calculate interest rate given the information i.e. PV, pmt, FV, and n. Simply plug in the numbers in the calculator and compute I/Y.
IFT Support Team
Will questions such as in 7.2 appear in the actual exam, like using both methods? Or will it just be a normal MCQ using calculator?
Getting 100$ for next five years and in addition to that, we are receiving 1000$ then FV should be 1100$ isn't it?
PMT is $100 and N= 5; hence, $100 is already taken into account in payments to be received for 5 years.
IFT support team
In the last video you said you will teach how to solve for unequal cash flows using calculator in the next video?
exactly, thats what im looking for as well
Example 7.3 why is this example not solved using annuity due.ie beginning annuity payment since monthly payment has to be paid at the start of each month??
it's due at t=1. That's why. If they said immediately or today or at t=0. You use annuity due.
the first payment is at t = 1, not = 0.
IFT support team
in example 7.3 how did u get 0.85, plz reply
Since down payment is 15%, this implies loan amount will be 100% - 15% = 85% or 0.85.
IFT Support Team
Could you say which formula you used for solving for interest rate and growth rates exercise 3
Which question are you referring to? Please provide more details.
IFT support team
@@IFT-CFA You invest $900 today and receive a $100 coupon payment at the end of every year for 5 years...so on.. That one
@@lamiyahajizada7581
This is something that will be difficult to solve manually.
Assume r to be the interest rate.
The FV for PV = 900 is 900*(1 + r)^5.
The FV for payments 100 can be calculated by using formula for FV for Ordinary anuities. (note: FV will be negative because we are receiving payments. Using FV formula because it makes it easier)
This FV = -1* 100* ((1 + r)^n - 1))/ r
Now add both the FVs to get the real FV = 1000.
As you can see, it will quite difficult to solve it via calculator as well.
@@ishaanshah007 So is it something that must be solved using the calculator?
@@iuson1351 yes, it can be solved easily using a financial calculator as they have shown in the video.
7.3 Interest has to be .08/12 rite!?
How cum 8/12....!?